- The Washington Times - Friday, January 24, 2003

As the dean of the Washington press corps, David Broder's analyses are widely dispersed throughout the nation's news community to audiences far beyond the Beltway. For this reason, Mr. Broder's recent mischaracterization of federal taxing and spending policies was especially disappointing.
In a recent column in The Washington Post, Mr. Broder cited graphs from the current issue of the Atlantic that purported to reveal "the REAL state of the [federal] budget," and "the hidden budget," comprising $800 billion in "tax expenditures."
The five largest federal tax expenditures, according to the Atlantic, total $334 billion. They include: $88 billion (exclusion for pension contributions and earnings for employer-sponsored plans); $69 billion (exclusion for employer contributions for health care); $67 billion (deduction for home-mortgage interest); $65 billion (reduced tax rates for capital gains); and $45 billion (deduction for state and local income and personal-property taxes).
Without specifying a source, other than to say the numbers were compiled by Maya MacGuineas, whom Mr. Broder duly credits, the Atlantic reports that 55 percent of the benefits of the arbitrarily classified tax expenditures accrue to households making above $100,000 per year. Only 15 percent of the benefits reportedly accrue to households with incomes below $50,000. (We say the tax expenditures are "arbitrary" because they inexplicably exclude the $3,000 personal exemption for each taxpayer, spouse and dependent, which basically includes us all and by itself exceeds $800 billion.)
"This tilt, combined with the Bush tax reductions for top-bracket earners and the unyielding Social Security levies from the first dollars of wages," Mr. Broder tells his readers, "helps explain why the gap between the rich and the rest of Americans continues to increase."
We have a few problems with the argument advanced by the Atlantic and accepted lock, stock and barrel by Mr. Broder:
The notion of "tax expenditures" implies that any income or benefit that is not taxed by the federal government at its often-confiscatory rates is somehow undeserved or gained in an unholy manner.
Mr. Broder is clearly perturbed and wants the rest of us to be so as well by his belief that successful people (i.e., "the rich") do not pay their fair share of taxes. Yet, the supposedly loophole-ridden tax code did not prevent the IRS in 2000 (the latest year for which data are available) from collecting: (1) 56.5 percent of federal income taxes from the top 5 percent of income recipients (who earned 35 percent of total income); (2) or 67.3 percent of income taxes from the top 10 percent of income recipients (who earned 46 percent of total income). This progressive system enabled the bottom 50 percent of income recipients to pay less than 4 percent of income taxes.
While America's current employer-provided health-insurance system isn't one we would devise from scratch, we were not aware, until Mr. Broder pointed it out, that the tens of millions of working families receiving their health benefits through their employers were unworthy leeches on the body politic. The same would apply to the tens of millions of us who participate in employer-sponsored pensions or 401(k)s.
Before Mr. Broder and the Atlantic blew the whistle on the nearly 70 percent of families who either own their own homes or are paying off mortgages, we thought mass home ownership was a goal the government wanted to encourage. Now, we learn it was yet another under-the-table subsidy to the wealthy.
As for all those supposedly income-tilting "Bush tax reductions for top-bracket earners" and other giveaways to the rich, Mr. Broder should know that implementation of the president's entire $670 billion short-term stimulus and long-term growth plan would make the federal income-tax system even more progressive.

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